Cramer said compromise appears to still be the enemy in Washington, with several congressmen digging in their heels and sticking to their previous vows to never raise taxes, no matter how desperately they may be needed.

He said the current scenario feels much like the passage of the Troubled Asset Relief Program, or TARP, a few years ago, where politicians only got on board with the plan after the market fell by 10% and they realized just how bad things would become.

Cramer predicted the markets will see their first leg lower during the last week of the year as nervous investors liquidate positions ahead of the new tax rules. Afterward, Cramer said, we're likely to see further declines every Thursday as jobless claims begin to rise.

So how can investors protect themselves? Cramer said all stocks will feel the pain of the cliff, but those that will recover first will be those with the biggest gains before the cliff.

He said the housing recovery will continue on, which means stocks like Home Depot (HD) , Sherwin-Williams (SHW) and Whirlpool (WHR) will bounce first, as will the high-yielders like AT&T (T) and Verizon (VZ) .

Be ready to scamper out of the abyss, Cramer concluded, because after the markets fall by 10% or more, these stocks will be the ones to help us recover.

What the Heck?

In his "What The Heck?" segment, Cramer turned the spotlight on Trimble Navigation (TRMB) , a once-left-for-dead global-positioning company that is now flirting with its 52-week highs and is up over 18% in just the past 30 days.

Cramer said he was amazed at what he found when looking into Trimble because the company is no longer just making commodity GPS sensors like everyone else.

Trimble got smart, said Cramer, and evolved into communications, which then led to data modeling and analytics and finally gave the company an entire suite of software tools to help those in construction and other industries run their operations more effectively.

Trimble has now entered into a joint venture with Caterpillar (CAT) and its machine control technology is being sold right alongside CAT's biggest equipment. This gives Trimble a competitive edge, noted Cramer, in an industry where there is still plenty of room to grow.

Trimble last delivered an earnings beat of 6 cents a share on better than expected revenue. Shares currently are going for 17.8 times earnings and the company has an 18.3% growth rate.